Consumer prices are forecast to rise 5.14 percent, also the
most since 2008, according to a document on the government’s
2012 budget proposal distributed by the Finance Ministry in
Quito today.

The administration of President Rafael Correa is calling
for a 2012 budget deficit of $4.23 billion.

The South American nation has had limited access to foreign
credit since defaulting on $3.2 billion of international bonds
in 2008 and 2009. Under Correa, the government has tapped China
for $7.25 billion in loans, or 16 percent of the country’s total
outstanding debt, and relied on new taxes and windfall oil
profits to finance spending.

Ecuador, the Organization of Petroleum Exporting Countries’
smallest member, forecast oil prices will average $79.7 a barrel
in 2012, according to the Finance Ministry document.

Correa last month announced plans to raise taxes for the
ninth time since 2007, almost doubling beer prices and raising
fees on cigarettes and capital exports. The new taxes would
generate at least $905 million, according to government
estimates compiled by Bloomberg.

Ecuador, which has defaulted on foreign debt twice since
1999, plans to sell international bonds this year or next to
test the appetite for the country’s notes, Correa said in
August. The government is also seeking additional bilateral
loans from countries such as China and Russia to finance public
spending, he said.